Banned

Can someone please point me to some references explaining how Canadian mortgages are calculated (i.e. how much goes of a payment against the principal and so on)? I remember reading a few years back that the most of the formulas found on the web are for the US and not correct for Canada - I forgot the details but it was something about how compounding is calculated there compared to here.

My practical question is that I'd like to assess the impact of making a lumpsum payment versus other investment choices (the eternal question

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I may be mistaken, but I'm pretty sure the amortization schedules are the same for mortgages no matter where they're located; the only diff between Canadian and US mortgages is that in the US your mortgage interest is tax-deductible. So any simple mortgage calculator, one that shows you the amortization schedule only without any tax benefits, should do the trick.

Registered

So google Mortgage Cal and pick a Canadian one. Make sure you get your interest and amortization period correct and weekly biweekly.

Most will show principle and interest if you are on your 20th payment go there and deduct your lump sum from the principal so maybe move down 5 payments and the interest on those 5 payments is your immediate savings.

Now notice how your principal and interest changes every payment. So for the remainder of your mortgage your money will be working that much harder for you.

Registered

The impact of a pre-payment is both a shorter amortization and saved interest (assuming you keep payments the same). The link I posted earlier will allow you to calculate both. (You can also opt to keep the amortization period the same, and get lower monthly payments.)

Banned

One thing I'm not sure about: is it a valid calculation if I consider the mortgage starting today, with the current balance shown online by my bank (TD)? Or do I have to start the calculation on the date of the last term renewal and the balance at the time, then calculate how many payments I've made since then so I can input a lump sum on payment #143 (I pay weekly). The latter is more inconvenient, partially because I'm on a variable rate and the rate has changed several times because of the recession.

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Based on my situation, what would be the best way to invest this money?
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